Transcription
InvestorPresentation2018 Q4
NoticeThe information contained herein has been prepared byTürk Telekomünikasyon A.Ş. (the Company) inconnection with the operations of Türk Telekom Groupcompanies. The opinions presented herein are based ongeneral information gathered at the time of writing andare subject to change without notice.These materials contain statements about future events andNone of the Company nor any of its shareholders, directors orexpectations that are forward-looking statements. Any statement inemployees nor any other person accepts any liabilitythese materials that is not a statement of historical fact is a forward-whatsoever for any loss howsoever arising from any use of thislooking statement that involves known and unknown risks,presentation or its contents or otherwise arising in connectionuncertainties and other factors which may cause our actual results,therewith. The PSTN services and wholesale broadband servicesperformance or achievements to be materially different from anyare provided by Türk Telekomünikasyon A.Ş., the retail internetfuture results, performance or achievements expressed or implied byservices are provided by TTNET A.Ş. and the mobile services –such forward-looking statements. Except to the extent required byare provided by TT Mobil İletişim Hizmetleri A.Ş. Türk Telekom law, we assume no obligations to update the forward-lookingbrand used in this presentation is the joint brand of Turkstatements contained herein to reflect actual results, changes inTelekom Group companies. All group companies legal entitiesassumptions or changes in factors affecting these statements. Thisremain intact. There may be differences between the datapresentation does not constitute an offer or invitation to sell, or anyprovided in this presentation and ICTA’s market reports. Thesesolicitation of any offer to subscribe for or purchase any securities anddiscrepancies are due differences in basis of financial reportingnothing contained herein shall form the basis of any contract or(standalone vs. consolidated) and differences in ARPUcommitment whatsoever. No reliance may be placed for any purposescalculation methodologies.whatsoever on the information contained in this presentation or on itscompleteness, accuracy or fairness. The information contained in thispresentation may be required to be confirmed, completed andamended. Therefore, no declaration or commitment has been given orThe Company relies on the information gathered fromthe reliable sources however does not guaranteecompleteness and accuracy of such information.implied on the name of the Company or its shareholders, directors,employers or other third persons depending on the authenticity,Note: EBITDA is a non-GAAP financial measure. The EBITDA definition used in this investorpresentation includes revenues, cost of sales, marketing, sales and distribution expenses,general administrative expenses, research and development expenses and other operatingincome/(expense), and income/(expense) from investing activities, but excludesdepreciation,amortization and impairment expenses, financial income/(expenses)presented in other operating income/(expenses) (i.e. FX gain/(loss), interest and rediscountincome/(expense) on current accounts excluding bank borrowings).completeness and accuracy of the information.2
StrategicHighlightsFixed BroadbandPenetration IncreaseCyber Security CenterAlmost halfof the 2018 FBB netaddscame viaİnternet Bizden8.3 mnTürk Telekom integrated its CorporateSecurity Services in Ankara under thelargest Cyber Security ServicesDOWNLOADSas of DecemberCustomer Database72%Online İşlemler24 mnof customers consentedfor sharing of their infoamong our groupcompaniesDOWNLOADSas of December63%penetrationamong oursmartphone usersInfrastructure Rental4.7pptYoY increase in multiproduct ownership toPilot Project withVodafone on Leasingof Fixed ElectronicCommunicationInfrastructure wascompleted63%**Among constant customer sub universe that provided consent last year3
Net SubscriberAdditionsBroadband308K1.2mnQ4 ‘182018Mobile718K1.9mnQ4 ‘182018Home TV59K492KQ4 ‘182018108K338KQ4 ‘18201846.0mntotalsubscribers4.3mnnet additions*in 20181.2mnnet additions*in Q4*Includes Tivibu GoFixed Voice4
FinancialPerformance(TL mn)20172018Growth (YoY)2017 Q42018 Q4Growth e(exc. 528,43630.7%1,5252,22946.2%EBITDA Margin35.6%41.3%31.8%41.3%Operating Profit3,4334,70136.9%7131,24474.5%Net Income1,136(1,391)n.m.(113)2,215n.m.Adjusted 726.9%1,7221,451(15.8%)(1) IFRIC 12 adjustment is a non-operational revenue line booked in conjunction with upgrades to fixed line infrastructure, such as the upgrade from copper to fiber based network(2) Adjusted net income excludes the net impact of FX & FX hedging gain/loss (after tax) during respective period.Türk Telekom adopted IFRS 15 and IFRS 9 accounting standards starting from 1 January 2018. For further details please refer to “Financial Footnotes” & ”Summary Financial and Operational xls” on our web site.5
Fixed BroadbandPerformanceARPU & SubscribersSubscribers (mn)41.644.7ARPU (TL)45.944.810.99.78.7308K8.0net additionsin Q4Q4 '15Q4 '16Q4 '17of the 2018 FBB net adds camevia Internet Bizden campaignQ4 '18Fiber SubscribersSpeed Breakdown(thousand)(% of Subscribers)3,6332,749254KAbove 20MbpsUp to 20Mbps31%net additions2,011Almost halfQ4 ‘17in Q450%Above 20MbpsUp to 20Mbps37%Q4 ‘1844%1,46519%Up to 8MbpsQ4 '15Q4 '16Q4 '1719%Up to 8MbpsQ4 '186
MobilePerformanceGrowing ARPU & Subscribers(thousand)Türk TelekomBlended ARPU (TL)Prepaid (mn)Net Subscriber AdditionsPostpaid (mn)Vodafone6.0%churn in Q4TurkcellAverage Quarterly Churn 01,0441,028772576net additionsin Q48.58.58.88.82119.32014Q4 '14Q4 '15Q4 '16Q4 '172015201620172018Q4 '18-547-623-966Other operators’ data are from their own publications.7
Mobile DataData Revenue(Mobile service revenue share)Data Revenue Share45%LTE Users*57%46%75%(GB per LTE user)6.577%83%67%35%Q4 ‘18Avg. MonthlyMobile Data UsageLTE CompatibleSmartphone**(Total subscriber share)44%Q4 ‘1743%55%6.14.8SmartphonePenetrationQ3 '17Q3 '18*Subscribers who1) registered for LTE2) have LTE compatible device and simcardQ4 '18Q4 '17Q3 '18Q4 '18Q4 '17Q3 '18Q4 '188*Among smartphone users
TV PerformanceSubscribers(thousand)Tivibu Home1,600Total TV (Tivibu Home Tivibu Go)1,6603,5253,626101K59K1,167net additionsin Q4net additionsin Q42,740Wireless Homes86%of Q4 ’18 DTH grossadds came viamobile synergyoffersQ4 '17PlatformContentQ3 '18Q4 '18Q4 '17Q3 '18Q4 '18IPTV DTH Web TV Smart TV‣ Turkish Basketball Super League‣ NBA‣ English Premier League‣ 3 Sports Inhouse Channels‣ Kids & Documentary Channels‣ 6000 on demand assets9
Fixed VoicePerformanceAccess Lines and ARPUFixed Voice (mn)Naked Broadband (mn)Fixed Voice ARPU 2.2108K9.69.5Q4 '16Q1 '179.49.59.69.79.79.89.9Q2 '17Q3 '17Q4 '17Q1 '18Q2 '18Q3 '18Q4 '18net additionsin FixedVoice in Q410
Financials
FinancialPerformanceRevenueEBITDA & Operating Profit(TL mn)(TL mn)EBITDA20,431Operating 7013,43320172018Q4 '17Q4 '182017Adjusted Net Income*Net IncomeCapex(TL mn)(TL mn)(TL mn)3,3542,2158562,4167132018Q4 '174,0871,722Q4 '181,4513,2211,136636-113-1,39120172018Q4 '17Q4 '1820172018Q4 '17Q4 '1820172018*Adjusted net income excludes the net impact of FX & FX hedging gain/loss (after tax) during respective period.Türk Telekom adopted IFRS 15 and IFRS 9 accounting standards starting from 1 January 2018. For further details please refer to “Financial Footnotes” & “Summary Financial and Operational xls”. on our web site.Q4 '17Q4 '1812
DebtProfileLow debt ratio among peersNet DebtNet Debt (TL bn)2.151.96Net Debt/EBITDABT Group2.301.891.791.931.831.86Vodafone Group1.85Türk Telekom1.86Orange 4.1Q1 '17Q2 '17Q3 '17Q4 '17Q1 '18Q2 '1818.1Q3 '1815.8Q4 '18Telefonicaup to 1 yrIncluding 2019 maturitybond (USD 500mn)1 to 2 yrGross Debt FX BreakdownFX hedged with PCCSEUREUR34%3.34Source: Bloomberg*ürk Telekom’s ratio is based on Q4 ’18 financials; other’s based on theirlatest dataNet Debt/EBITDA calculation excludes extraordinary claims EBITDA calculationCash FX Breakdown2.93Telecom ItaliaNote: Net Debt calculation includes MTM from FX to TRY Currency SwapsMaturity ProfileTL34%28%51%21%Q4 ‘18Q4 ‘1827%4.5bn TL27%Net Debt / EBITDA1.43Q4 ‘18FXQ4 ‘1833%19.9bn TL19%2 to 5 yr 5 yrIncluding 2024 maturitybond (USD 500mn)16%72%39%USDUSDFX hedgedwith cashAll loans are senior unsecured13
DebtProfilePrudent Balance Sheet Management‣ FX Risks managed via Participating Cross Currency Swaps (PCCS), and FX based cash‣ Hedge in both principal and coupons of designated debt instruments‣ Protection level of existing hedges strengthened during the quarter‣ Diversified funding terms of instruments (bonds, ECAs, commercial loans, and IFIs) and geography‣ Significant improvement in cash flow generation with normalized Capex cycle and increasing EBITDACorporate Credit RatingsHedge RatioIncreasing Cash Flow*Gross FX Debt (bn USD)Hedge Ratio(TL mn)Fitch RatingsBB Negative OutlookS&P Global 257%4.167%1,6673.8Stable Outlook320Q1 '17Q2 '17Q3 '17Q4 '17Q1 '18Q2 '18Q3 '18Q4 '18201620172018*Unlevered cash flow is defined as net cash provided by operating andinvesting activities from operations.14
GuidanceTL mnRevenue(exc. IFRIC 12)1EBITDACAPEX2018 YE19,6602019Guidance15% - 16% growth8,436TL 10.0 to 10.2 bn4,087TL 5.5 bn to 5.7 bnTürk Telekom adopted IFRS 16 accounting standards starting from 1 January 2019. Guidance includes IFRS 16 impact onEBITDA (TL 650 - 700 mn) and CAPEX (TL 850 - 900 mn).(1) IFRIC 12 adjustment is a non-operational revenue line booked in conjunction with upgrades to our fixed line infrastructure such as the upgrade from copper to fiber based networkTürk Telekom adopted IFRS 15 and IFRS 9 accounting standards starting from 1 January 2018. For further details please refer to “Financial Footnotes” & “Summary Financial and Operational xls” on our web site.15
Appendix
IncomeStatement(TL mn)20172018YoY ChangeQ4 ‘17Q4 ‘18YoY .8%41.3%Operating %Financial Inc. / (Exp.)1(1,954)(6,723)244.0%(1,061)1,413n.m.FX & Hedging Gain / (Loss)(1,454)(5,982)311.3%(886)1,736n.m.Interest Inc./(Exp.)(340)(659)93.8%(91)(216)136.8%Other Financial IInc./(Exp.)(160)(82)(48.7%)(84)(107)27.9%Tax Expense1(343)631n.m.235(442)n.m.Net .n.m.41.0%36.9%74.5%Türk Telekom adopted IFRS 15 and IFRS 9accounting standards starting from 1 January 2018.For further details please refer to “FinancialFootnotes” & “Summary Financial and Operationalxls” on our web site.(1) Bills, bonds and notes issued that were measured amortized cost at Q1 and Q2 2018 are measured at fair value as of Q3 ’18. Consequently, the changes were reflected to 2018 Q1 and 2018 Q2financial statements. For further details please see 2018 Q3 financial statements and footnotes.17
BalanceSheet(TL 9Cash and Equivalents4,1006,1874,495Intangible Assets8,4829,6799,783Tangible Assets19,13814,14714,274Other Assets2&57,4288,9317,647Total Equities and Liabilities29,14938,94536,199Share Capital3,2603,2603,260Reserves, Retained Earnings andOther Equity ,823Total AssetsInterest Bearing Liabilities3&5Other Liabilities4Türk Telekom adopted IFRS 15 and IFRS 9accounting standards starting from 1 January 2018.For further details please refer to “FinancialFootnotes” & “Summary Financial and Operationalxls” on our web site.(1) Tangible assets include property, plant and equipment and investment property(2) Major items within other assets are trade receivables, due from related parties,inventories, deferred tax asset and other current assets.(3) Includes short-term and long-term borrowing and short-term and long-term obligations under finance leases(4) Major items within other liabilities are deferred tax liability, trade payables, provisions, income tax payable, due related parties, other current liabilities, provisions for employeetermination benefits(5) Bills, bonds and notes issued that were measured amortized cost at Q1 and Q2 2018 are measured at fair value as of Q3 ’18. Consequently, the changes were reflected to 2018 Q1 and2018 Q2 financial statements. For further details please see 2018 Q3 financial statements and footnotes.18
IFRS 15 AdoptionReconciliationTürk Telekom adopted IFRS 15 and IFRS 9 accounting standards starting from 1(TL mn)Q4 ‘18IFRS 15 ImpactQ4 ’18 w/o adoptionof IFRS 1.3%Operating Profit1,244Margin23.0%37.8%581,18621.9%Financial Inc. / (Exp.)1,413(5)1,418FX & Hedging Gain / (Loss)1,7361,736Interest Inc./(Exp.)(216)(216)Other Financial IInc./(Exp.)(107)(5)(102)Tax Expense(442)(4)(439)Net Income2,215502,165Margin41.0%40.0%January 2018. For further details please refer to “Financial Footnotes” &”Summary Financial and Operational xls” on our web site.19
IFRS 15 AdoptionReconciliation31.12.2018IFRS 15 Impact31.12.2018 w/oadoption of IFRS 15Total Assets36,1991,02035,179Cash and Equivalents4,495Intangible Assets9,783Tangible Assets14,274Other Assets7,647(4)7,651Total Equities and Liabilities36,1991,02035,179Share Capital3,260Reserves, Retained Earnings andOther Equity Items4,193Interest Bearing Liabilities19,921Other Liabilities8,823(TL 8Türk Telekom adopted IFRS 15 and IFRS 9 accounting standardsstarting from 1 January 2018. For further details please refer to“Financial Footnotes” & ”Summary Financial and Operational xls” onour web site.20
Q&ATürk Telekom Investor Relationsinvestorrelations@turktelekom.com.tr 90 212 309 96 30ttinvestorrelations.comtwitter.com/ttkomir
Thank YouTürk Telekom Investor Relationsinvestorrelations@turktelekom.com.tr 90 212 309 96 30ttinvestorrelations.comtwitter.com/ttkomir
Türk Telekom adopted IFRS 15 and IFRS 9 accounting standards starting from 1 January 2018. For further details please refer to "Financial Footnotes" & "Summary Financial and Operational xls". on our web site. Q4 '17 Q4 '18 856 636 *Adjusted net income excludes the net impact of FX & FX hedging gain/loss (after tax) during respective .
